Meehna Goldsmith recently posted an excellent interview on Investing in Watches (Part 1 and Part 2). The topic is very interesting, especially as it has long been taboo to discuss on other internet forums.
First of all, I would not buy watches as investments. There are plenty of investment opportunities in the world, and while I will argue later that watches could potentially be a good one, it is too uncertain now. My own watch buying is built more around a storage of a value rather than appreciation. My goal is to not lose too much on a watch and then the pleasure of owning it far outweighs the opportunity cost of investing the money somewhere else.
That being said, I really do think watches *may* prove to be a good investment – but, here is the key – IN THE LONG RUN. In the short run, watches depreciate. We all know this. I cannot think of a single product designed to actually be used that does not depreciate from its NEW state to a USED state. But really that is a limiting view.
What I am more interested in is 15-20+ years from now. At that time horizon, the question is no longer new or used, it is good or bad, important or unimportant. This is when the real action starts. Assuming people still care about watches at all (I hope and believe they will), I truly believe that some sectors of the current market have a real potential for major appreciation. I believe that this period of Contemporary Horology created by a few amazing, independent companies – a representation of living, breathing creators – will be looked back at as an important period in watch making history. If that is true, you can only imagine what will happen to values of whichever pieces are considered the most important, often made in quantities of less than 100 – way rarer than nearly any Patek you see at auction.
This was my favorite part of Dolly’s interview:
MG: Why do some timepieces hold value and others don’t?
DC: To understand why certain specific timepieces will surely be of value, far and above what they are worth in the market today, one only has to ask questions of history. Certain postage stamps, violins, wines and first print books were made in relatively large numbers. Even art for that matter. Were these more delicate, more easily damaged, recreated and copied, than timepieces? Didn’t they have periods of total neglect, when the educated portion of the public ridiculed, even destroyed them, and viewed them as disposable? Didn’t almost all art, wines, stamps, books, and even automobiles have extreme variations in their form and values? Didn’t the precious, highly prized examples often have common parts of low value, pedestrian components, and were mass-produced at their time of conception? Watches will outperform all of these.
If you buy pieces of real value and true creativity that are the finest representations of the culture NOW, not reproductions of history, you could be very happy at auctions in 20-30-50 years.